I am always asked how I keep on writing this column every week without running out of ideas – the opposite is true in that there is so much I could write about, I never know where to start.
You will have noticed, of course, that I have my favourite subjects – vertical integration is one, if you hadn’t realised – and that not much research goes into what I say (Michael East always tells me it shows). It’s all down to instinct and gut feeling.
Going back over the years you will find I have very rarely been wrong and most of what I have said has come to pass.
I have always been fascinated by the industry and by those who have shaped it. This year will be a watershed for our sector as it is the year when everything comes together and the beginning of the phase when the consolidation will have reached its peak and the trend will be towards fragmentation once more.
Thomson has been busy buying up a lot of brands for its new independent holidays group, something attempted by the old Owners Abroad Group 10 or so years ago. The diffference is that Owners bought smaller and generally less profitable companies, while the Big T has been paying big bucks for larger, more profitable operations.
Are the companies that Thomson and Airtours have been buying specialist, niche operations? Well, with the exception of Headwater, probably not. And, if they were semi-specialist before they were purchased, then they will not remain so for long.
The key is in the ownership. I have spoken to enough ex-owners who have sold out to the giants to know that subtle changes quickly take place which change the nature of the business for ever.
You see, the owner of a business stamps their personality on what has been created. The personality and the leadership permeates down to all levels within the organisation creating a bond and a spirit which can never be recreated.
The speed of interaction and decision, the personal involvement, fear and excitement disappear once the owner has pocketed many millions. A successful entrepreneur needs to live by the seat of their pants and fight every inch of the way.
Those who have sold out have effectively retired and those who will administer the companies on behalf of grey, accountant-run conglomerates will never feel the same about the baby they haven’t created and suffered to bring up.
Even before these companies are bought, they begin to change in preparation for the sale. The balance sheets are manicured, formal, and written predictions about a rosy future are made. Flexibility and specialisation goes out of the window and numbers become the key to everything.
Public relations come into play and enormous sums are spent on the image that has been created – one which is often very far from the truth.
To even pretend that these companies, once purchased, are the same animals they were before is just ridiculous.
These are no longer individual businesses in the true sense of the word. In due course, the names will lose their significance and disappear in much the same way as all the names of the Owners Abroad group have long since disappeared or lost significance.
This is not a time for sadness on the part of niche operators but a time for rejoicing. The specialist is dead – long live the specialist!
Another January bites the dust. There were winners and losers among retailers and operators, but yet again the customer came out on top with tremendous value for money.
Against a very mixed and uncertain performance from leading non-travel retailers, the fact that the cumulative summer ’99 market is at similar levels to a year ago, and with the market trading just a few points lower than last year during January, we should be cautiously optimistic about the underlying demand for holidays.
Customers have taken the new rules on insurance and discounts in their stride, quick to identify that free insurance plus a little cash is exactly the same as a lot of cash and paying for your insurance.
The real trick for retailers in January was having the confidence to hold their nerve on pricing. Booking patterns were markedly different to last year when, after a very slow start, sales peaked in the middle of the month. But on the whole nerves were left in good shape and we certainly achieved a good result.
January is a great time for everybody in the industry to become a marketing expert and cast views on their competitors’ window displays, promotions and advertising. Among all the subjective views only one thing is for sure – in a price-sensitive market the Thomson TV message was so inappropriate for January it was bizarre.
With the pressure on operators to improve their mix of brochure bookings versus lates there is no doubt in my mind that customers who know what they want, particularly families, do get absolutely the best deal if they book in January. With guaranteed free child places, fluid-pricing discounts from operators, free insurance and cash discounts from retailers, it’s a ‘no-brainer’ to book in January. It is a shame that as an industry we have confused both consumer journalists and their readers to such an extent in recent years that even when the deals are this good they remain sceptical.
At Going Places we had a great January. I have been asked what made the difference. Was it the advertising, was it the pricing, was it the windows or was it our Tesco campaign? Only one answer – it was our people. We took a lot of stick for our pay and rewards scheme – don’t believe the propaganda, take a look at the results!